Portuguese economy takes a hit, despite rapid pandemic response

Imports and Exports | | MIC Customs Solutions |

Portugal was quick to act once it detected coronavirus, but this took a heavy toll on its economy.

Disappointing economic figures have been reported by Portugal, despite - or perhaps because of - the country's rapid response to control the coronavirus pandemic.

According to Reuters, exports from the nation fell by 13 per cent in March after measures were taken to shut down large parts of the economy, the National Statistics Institute (INE) said.

This followed a rise of almost one per cent the previous month and could be bad news for a country that relies heavily on exports as well as tourism.

The decline was mainly attributed to a 33.5 per cent decrease in the shipping of cars and automotive parts, particularly to its neighbours Spain and France as they also faced the global pandemic.

In the same month, the INE reported imports had fallen by 12 per cent. For the first quarter of 2020 as a whole, exports were found to have dipped by three per cent, while imports were down four per cent.

These disheartening figures came in spite of Portugal having largely succeeded in keeping its number of coronavirus cases low compared to the rest of Europe.

As of May 8th 2020, it had reported 26,715 confirmed cases and 1,105 deaths, which was significantly lower than Spain.

It benefited not only from a less dense population and a more isolated nature than its neighbours, but from acting on measures to prevent the spread of the disease before it was rife within its borders.

The figures are not yet in for April, but with almost the entire nation having been in lockdown for the duration of the month, they are likely to make for even more sombre reading than those for March.

Now, Portugal is pinning its hopes on industry and in particular its export markets rebounding as it implements a three-phase exit from lockdown starting this month.

Prime minister Antonio Costa will also no doubt be keeping his fingers crossed that the nation will be open again by June, thereby giving the tourism sector a chance to rescue the economic coffers.

Indeed, tourism is not just important for the ever-popular Algarve but for the whole of Portugal too, with 15 per cent of gross domestic product created by the industry. The INE estimates that a 25 per cent decline in tourism would cut annual economic growth to the tune of 2.9 per cent.

However, with some governments now warning their people not to expect international holidays this year, it may be that Portugal needs to remain hopeful that world trade rather than travel can provide the boost it needs to get back on its feet.